For the investors, both the Prosper and Landing Club are equally popular. But many assume that both fix their interest rates in the same way but this is not so? Prosper’s way is very similar to the way Ebay performs its auction, whereby the interest rate is set by the lenders through the bidding process. While on the other hand, Lending Club sets the interest rate on the basis of a formula and no bidding takes place.

The interest rate in Prosper starts from high level and slowly bid goes down. When the borrowers formulate their loan listing, they must mention the highest interest rate which they are most willing to pay. Prosper believes that starting from high interest rate attracts more lenders. For the lenders side, it is just the opposite. Those who bid on the loan must enter the lowest interest rate which they are ready to accept. Borrowers or other lenders cannot see this interest rate. As and as more lenders place their bid on the loan, their interest rates too go down. Bids start from lower interest rate to highest. In the case of a tie, the final interest rate is fixed by the time of the bid. This simply means that it is not Prosper but bidders who bid for the loan.

But in Lending Club, the scenario is completely different. Here the interest rate is set for borrowers and lenders on the basis of credit grade. The whole system depends on the grading. The interest rates for the Club are fixed and they tend to be generally the lowest in contrast to the market and getting loan also costs less. The Lending Club provides investors better chance to earn on your money in contrast to what you would like to see in the bank. Apart from interest rate, another factor to be considered is the fees they charge which is different for both the lenders as well as the borrowers.